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For Immediate Release - May 06, 2011

Former Beverly Hospital Contractor Pleads Guilty, Sentenced for Role in Commercial Bribery Scheme

SALEM - A former hospital contractor has been sentenced after pleading guilty to participating in a commercial bribery scheme at Beverly Hospital, Attorney General Martha Coakley's Office announced today.

John Kane, age 51, of Hanover, pled guilty today in Essex Superior Court to the charge of Commercial Bribery. Superior Court Judge David Lowy sentenced Kane to serve five years of probation, the first six months of which will be under house arrest. Kane will be monitored by electronic bracelet. Judge Lowy also ordered that Kane perform 300 hours of community service while on probation. Kane's construction company is also prohibited from bidding on public construction projects during that time.

On January 25, 2011, another contractor, Brian Lemay, age 53, of Andover, was sentenced on the charges of Commercial Bribery and Larceny over $250. Lemay was sentenced to two years in the House Correction, six months to serve, with the balance suspended for a probationary period of three years. While out on probation, Lemay will be under a supervised curfew monitored by the Department of Probation. Lemay must also pay full restitution in the amount of $216,841.21 and must also perform 250 hours of community service.

The former Associate Vice President for Beverly Hospital has also been charged in this case. Paul Galzerano, age 58, of Groveland, allegedly used the contractors involved in the hospital's renovation to pay his personal bills and to perform extensive renovations on his home. Galzerano is also accused of stealing several valuable antique items from the hospital. Galzerano faces charges of Commercial Bribery (3 counts) and Larceny over $250 (4 counts). He is due back in court on June 24, 2011.

Between 2003 and 2006, while employed as Associate Vice President of Support Services at Beverly Hospital, Galzerano oversaw a major multi-million dollar renovation of the hospital's facilities. Galzerano allegedly solicited and received kickbacks and bribes totaling nearly $500,000 from contractors working on the renovation. Authorities allege that the kickbacks to Galzerano ensured that the contractors would be granted lucrative contracts to do renovation work on the hospital.

Lemay owned a large company that specialized in HVAC services for hospital construction projects and Kane had a general contracting business that specialized in medical facilities construction. Galzerano and Lemay would inflate the prices of proposals submitted for hospital work, and the difference in the inflated costs would be paid back to Galzerano as payments for his personal bills. Lemay provided kickbacks to Galzerano in the form of approximately $270,000 in payments to Galzerano's personal credit card bills and mortgage payments. Investigators also discovered that some of the contractors performed various renovations at Galzerano's residence free of charge in return for favorable consideration in future hospital contracts. Kane performed and paid for substantial landscaping, painting, and other work done at Galzerano's property totaling more than $70,000.

On July 1, 2010, an Essex County Grand Jury returned indictments against Lemay. He was arraigned on July 22, 2010, in Salem Superior Court where he pled not guilty and was released on personal recognizance. Lemay pled guilty to all charges on August 17, 2010, and was sentenced on January 25, 2011.

On June 30, 2010, Kane was indicted by an Essex County Grand Jury. He was arraigned on August 17, 2010, in Salem Superior Court where he pled not guilty and was released on personal recognizance. Today, he pled guilty and was sentenced.

The case is being prosecuted by Assistant Attorney General Lee Hettinger, of AG Coakley's Fraud and Financial Crimes Division, and was investigated by financial investigator Jessie Dean and members of the Massachusetts State Police assigned to the Attorney General's Office. The Essex County District Attorney's Office and the Groveland Police Department also assisted with the investigation. Beverly Hospital cooperated fully with the investigation.